Baku, Azerbaijan, April 9. Azerbaijan’s
banking sector continues to demonstrate strong financial stability,
Trend reports
citing a recent report from the International Monetary Fund
(IMF).
While the sector overall remains stable, the IMF noted that
recent stress tests showed satisfactory capitalization levels under
both base and adverse scenarios. However, it also highlighted
concerns about some banks having insufficient capital buffers.
Under negative scenarios, these institutions could risk breaching
regulatory minimum capital requirements.
The report further pointed to risks associated with Azerbaijan’s
economy, particularly its heavy reliance on the oil and gas sector.
This dependence exposes the banking sector to potential volatility,
with fluctuations in wholesale corporate deposits raising liquidity
concerns.
Although the country has seen a decrease in financial
dollarization recently, it remains at a high level, creating
vulnerabilities. At the same time, the rapid rise of unsecured
consumer loans adds another layer of potential instability to the
financial system.
Experts caution that careful management and proactive measures
will be essential to ensuring the long-term stability of
Azerbaijan’s banking sector amidst these ongoing risks.
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